CHAPTER – 2
REVIEW OF LITERATURE
2.0 Introduction:
A literature review is a piece of academic writing demonstrating knowledge and
understanding of the academic literature on a specific topic placed in context. A literature
review also includes a critical evaluation of the material; this is why it is called a literature
review rather than a literature report. A literature review is the writing process of
summarizing, synthesizing and critiquing the literature found as a result of a literature search.
It may be used as background or context for a primary research project. In this chapter the
articles, reviews from various authors and researchers are collected here for reference and this
helps the researcher to get clarifications, tools to use, etc. Review of literature is very
important in a research work to get a proper guidance, review of literature for this study
relating to saving preference and investment habits among public. In this chapter several
literatures related to this study were collected, compiled and presented as follows.
2.1 Review of Literature:
A survey on “Indian Investors” was conducted by Securities and Exchange Board of India
(SEBI) and NCAER way back in 2000. The survey revealed that most of the Indian investors
prefers safe investment avenues i.e. while choosing the avenues for investing, investors
mainly consider safety and liquidity as important factors. From the results of the survey,
different investment avenues were ranked in order of safety and liquidity according to the
preferences of the investors: First of all, Bank deposits, in bank were considered very safe,
followed by gold, units of UTI, fixed deposits of non-government corporations, mutual funds,
equity shares, and lastly, debentures. Bank deposits is demanded across all income groups,
and tax saving schemes were preferred by middle-income and higher-income groups. The
survey also revealed that income levels also play an important role while making investment
decisions. In 2006, A study was conducted by Avinash Kumar Singh for studying the
Investment Pattern of the individuals in Bangalore and Bhubaneswar and also, pattern of the
investment in both the cities were compared. From the study, it was discovered that the
investors of Bangalore were more aware of the investment, investment avenues, risk and
return associated with different avenues and are risk takers as compared to the investors of
Bhubaneshwar who were risk averse, not aware much about different investment avenues,
risk and return associated with different avenues. Investors of Bangalore prefers to invest in
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shares, mutual funds and other risky avenues but, the investors of Bhubaneshwar prefer to
invest mainly in less risky Avenues. Bank deposits, Fixed deposits, Post office savings etc. A
comparison was made between investors of both the cities. In 2011, Dr. N. Ramesh and N.
Geetha conducted a study named “A Study on
Investor’s preferences towards investment in Kurumbalur area of Tamil Naidu”. For
conducting the research, the data was collected from 210 respondents of Kurumbalur town
and data was collected using questionnaire. It was found out that Investors of all age groups
prefers to invest in Insurance, National Savings Certificates, PPF and bank deposits. Also,
income of the individuals is considered as an important factor which affect investment
decisions & in selecting particular investment avenue. Funfgeld and Wang (2009) conducted
a study on the financial attitude and Behaviour of German speaking part of Switzerland on
daily financial affairs. The results show that there are five underlying dimensions on financial
attitudes and behaviour, which are anxiety, interests in financial issues, decision styles, need
for precautionary savings and spending tendency. Moreover, gender, age, and education were
found to have significant impacts. Graham et al. (2009) have recognized that perceived
expertise leads to overconfidence among investors regarding investing their hardearned
money.
V.R. Palanivelu & K. Chandrakumar (2013) examined the Investment choices of salaried
IT in Namakkal Taluk, Tamilnadu, India with the help of 100 respondents as a sample size &
it reveals that as per Income level of employees, invest in different avenues. Age factor is also
important while doing investments. Avinash Kumar Singh (2006) the study analysed the
investment pattern of people in Bangalore city and Bhubaneswar & analysis of the study was
undertaken with the help of survey method. After analysis and interpretation of data it is
concluded that in Bangalore investors are more aware about various investment avenues &
the risk associated with that
Karthikeyan (2001) has conducted research on Small Investors Perception on Post office
Saving Schemes and found that there was significant difference among the four age groups,
in the level of awareness for kisan vikaspatra (KVP), National Savings Scheme (NSS), and
deposit Scheme for Retired Employees (DSRE), and the Overall Score Confirmed that the
level of awareness among investors in the old age group was higher than in those of young
age group.
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Sandhu and Singh (2004) The study was based on structured primary data. The sample of 50
adopters and 50 non-adopters from the universe comprising the city of Amritsar was selected.
The study analysed in case of adopters that transparency, safety, convenience and economy
judged as an important feature of net trading followed by market quality and liquidity
whereas in case of nonadopters economy and convenience were the important features
followed by the other factors like market quality, safety and liquidity.
Manish Mittal and Vyas (2008) Investors have certain cognitive and emotional weaknesses
which come in the way of their investment decisions. Over the past few years, behavioral
finance researchers have scientifically shown that investors do not always act rationally. They
have behavioral biases that lead to systematic errors in the way they process information for
investment decision. Many researchers have tried to ITify the investors on the basis of their
relative risk-taking capacity and the type of investment they make. Empirical evidence also
suggests that factors such as age, income, education and marital status affect an individual's
investment decision. This paper ITifies Indian investors into different personality types and
explores the relationship between various demographic factors and the investment personality
exhibited by the investors.
Sonali Patil (2014) studied preferred investment avenues among salaried people with
reference to Chennai City, India. A sample size of 40 investors has been taken from the
Chennai City, India. The result of finding showed 60% investors were aware about the
investment avenues whereas 40% were unaware.
Wadhwa, Vashisht&KaurVashisht (2015) Occupation level, education level and financial
literacy are the major factors for deciding investment. Narayana (1976) found that bank
deposit, shares are the most preferred investment. Abhijit Dutta (2000) concluded that
individual investors have high confidence in themselves and depend on market information.
Kirshnudu.Ch, B. Krishna Reddy and G. Rama Krishna Reddy (2005) have found out that the
Investors are mostly influenced by family members while taking decisions on investment.
Sunatan Khurana (2008) found that that protection is the main purpose for taking an
insurance policy. Kasilingam.R and Jayabal.G (2009) pointed out that small savings
investment schemes get good results. Selvatharangini P.S (2009) concludes that generally
people differ in their taste and preference. Kaboor.A (2010) finds that financial literacy is not
uniform among different groups of investors. Poongavanam (2017) stated that banks are not
performing well, investors do not prefer to invest in banks. Rajasekar (2013) Indian investors
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seek for safety, security and performance rather than easy encashment or customer service in
mutual fund investment. K.Jothilingam and Kannan (2013) found that there is no significant
relationship between gender and the objective of investment. Rajasekar (2014) All the
insurance offices are performed well and the premium income of life insurers especially in
the private sector increased, this is due to the increase in household sector savings.
Divyaranjani (2013) Company performance is the major factors which may attract the
shareholders. Rajasekar (2017) stated that the empowerment happens then employees would
work to deliver under all circumstances and loyalty becomes a natural choice thereby
avoiding problems of employee turnover and employee invest their own company’s shares.
A REVIEW RESEARCH ON INVESTMENT BEHAVIOUR
OF DIFFERENT CLASS PEOPLE.
Saving and Investment behaviour of Teachers:
A. Ushalakshmi & Dr.K.Selvavinayagam (2019) studies the investment behaviour of
College Teachers of Government and Private Colleges in Dharmapuri District. Researchers
found that being from salaried class college teachers of both government & private college,
they consider safety as the most important factor while investing. This behaviour was a result
of lack of financial literacy and lack of awareness about the grievance process available in
case of issues. Most of them tend to invest in gold, real estate, secured fixed or recurring
deposits in banks and insurance. A few, who are aware of the financial market use other
investment options like share market particularly in systematic investment plans and mutual
funds. Dr. N. S. Pandey & P. Kathavarayan (2017) has conducted research on the savings and
investment behaviour of college faculty members in Puducherry region. This study deals with
investors' preference of Shares, Debentures, Mutual fund, Bank deposits and Life insurance
etc. It was conducted through primary data with a sample of 113 respondents from
Puducherry region. The results of the study show that age, gender, education, marital status
and income shows highly significant towards investment preferences and correlation
inferences awareness towards investment avenues and education is significant, Chi square
find the satisfaction level towards investment has association between age, gender, monthly
income, marital status, education.
Dr. Varsha Virani (2014) The research study was based on the micro economic approach of
estimating the responses of the respondents i.e. school teachers towards the savings and
investment pattern in the Rajkot city. The objective of the study was to determine the
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relationship between the savings and investments pattern among the school teachers. The
study was done on the different government and private school teachers. The data was
collected by distributing a structured questionnaire to 100 school teachers in different schools
of Rajkot city. In spite of low income the teachers have been saving for future needs. The
major impact on savings was due to the level of income of the school teachers. The research
shows that majority of the respondents were saving money as Bank deposits for the safety of
an unpredictable future. The main avenues of investment are Bank deposits and the main
purpose of investment was for children education, marriage, and security after retirement.
Investment behaviour of Working women:
Dr.V. Krishna Kumari (2018) studies the impact of savings and investment behaviour of
working women in Chennai city. She explored the socio-economic & investment profile and
the factors that influencing the savings and investment behaviour of a sample of 100 working
women investors in North Chennai city. The study uses percentage analysis, factor analysis
and analysis for variance to test the hypothesis. The application of percentage analysis
revealed that the maximum percentage of 63% of employees are interested to save their
income for meeting the future benefits and the remaining 37% of women employees are
interested in savings and investment. 45% of women employees are interested to save their
income to met their comfort retirement life, 30% of working women employees are showing
keen interest to save their income for giving quality education for their children and 25% of
the working women employees save their income for meeting expenditure like children
marriage and buying fixed assets to lead a better life and get recognition in the society The
paper concludes Women investors should look in all avenues while investing their valuable
income.
Investment behaviour of financial professionals:
Rene Schwaiger, Michael Kirchler, Florian Lindner, & Utz Weitzel (2019) Researchers
investigate determinants of price expectations and satisfaction levels of financial
professionals and students. In experiments with 150 professionals and 576 students, they
systematically vary price paths according to the final return (positive or negative) and the
way in which the final return is achieved (upswing followed by downswing or vice versa).
Professionals show the most optimistic price expectations and were most satisfied if as- sets
fall in price first and then recover. In addition, professionals’ price expectations were highest
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after positive returns. Among students, qualitatively similar habits emerge, but professionals’
price expectations were less prone to framing effects.
K.V. Ramanathan & K.S. Meenakshisundaram (2016) examined the investment behaviour
and level of Satisfaction of bank employees (private sector) towards various investment
alternatives. The study was made with a sample of 125 bank employees through a structured
questionnaire using the statistical tools such as measures of central tendency, regression
analysis, ANOVA and MANOVA. The results of multivariate analysis revealed that there is
no significant difference between expected return satisfaction and Investment evaluation
decision. ANOVA also revealed that there is no significant difference between expected
return and the level of satisfaction of the respondents.
Investment behaviour of IT Professional:
Anju K J &Dr. Anuradha P S (2017) Researchers has conducted research to understand the
saving and investment behaviour of the IT professionals in Bengaluru. The rationale behind
choosing this topic was that IT professionals have gained attention of economists but there
still remains untapped potential of their income. Primary data was collected through
questionnaire from 439 respondents. Two-way ANOVA, Pearson’s Correlation, Factor
Analysis and Multiple Linear Regression were employed to answer the research questions.
This study revealed that there was positive interaction between annual savings and expected
rate of return on percentage of savings for investment, efficacious factors impacts the
preference of investment portfolio and aspects of investment planning influences the
investment objectives.
Investment behaviour of General Professional:
Dr.T.Sisili, S.Gokulkumar, S.Sivakumar, G.Manikandan, &V.Dineshkumar (2018)
studies the investment behaviour over investment options among five different types of
professionals (Professionals, Government Employees, Teaching fraternity (School), Teaching
fraternity
(College), Business/Self Employed). They found that males invest more in Fixed Deposit and
Insurance, whereas Females were concerned and they invest more in PPF, Gold/ Silver, FD
and Insurance, age group between 35 – 50 years makes more investment as compared to other
age group, when income was taken into consideration, the study revealed that the population
earning above 30,000 invest more, employability states that population of Government
Employees, Business/ Self Employed and Professionals invest more as compared to Teaching
fraternity (College) and (School) and others.
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Sameer S. Manek (2017) has conducted research on investment behaviour of professional
people of Rajkot City. Researcher states that investors were expected to earn high return but
with the safer side. It was found that Mutual Funds were more attractive investment for the
majority of the people because it has high return and more liquidity therefore it was found
more expected and while the conservative investors who expect more safety of their
investment were expected to go for fixed deposits too.
A. Charles &Dr. R. Kasilingam (2016) studied the influence of investors’ Profession in
Investment decision. The primary objective of this study was to find out the significant
association of investors’ different professions with their investment behaviour. It was found
that many demographic factors directly or indirectly influence investor’s investment
behaviour and decisionmaking process. Individual’s Profession was one such factor which
directly influences their investment decisions which later affects their investment behaviour.
Results of this study indicate that individuals’ professions play a significant role of
determining their investment behaviour
Investment behaviour of Middle-income group:
Rohan Agnihotri & SnehalTambe (2019) studies the investment habits of Indians from the
middle-class income group. Research states that the individual financial growth was crucial
and middle-class income groups often weren't able to expand beyond certain levels, due to
many factors. They framed the objectives of learning the investing habits, habits and factors
to be considered for the middle-income group investment. It was found that i) Aversion to
exploration of alternative options, (ii) Inadequate levels of financial literacy levels & (iii)
Needless high expenditure on nonessential things were the three important factors that stops
the investing habits of middle-class income group in various investment avenues.
Megha Goyal & Dr. Anukrati Sharma (2014) researchers analysed the investment behavior
adopted by middle class as seeker, included both groups engaged in either service or
business, whose income exist between Rs.2,00,000 to Rs.5,00,000 per annum. The reason
behind selecting the particular income group was to find that how to manage their investment
with small income after spend their hug expenses. The study has conducted to answer few
important questions about preferences of the investment instrument as real estate, bullion,
precious stones, money market and capital market etc., investment pattern adopted in a
specific manner and objectives behind opting a particular investment instrument. The income
class looks for safety or less risky investment avenue because of their small saving and
prefers to make investments according to their risk bearing capacity. Thus, they preferred
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fixed deposits with banks and post office, public provident fund and life insurance policies
etc. But they are not enough satisfied with their investment decision in such avenues due to
low return for e.g. 4% interest rate on saving account. Because of low returns on these
investments, they are not able to cope with their future needs. So government and policy
maker should make policies, according their investment behaviour and needs.
Investment behaviour of Rural and urban people:
Dr. T. Tamilselvi (2015) examined the investors attitude towards the investment avenues in
the Coimbatore Districts with the help of 300 respondents by dividing equally 150 each from
rural and urban areas. Researcher framed 15 types of attitudes of investment and investors
like liquidity, safety, return, stable income, government securities, investing today for a better
tomorrow, investment guided by credit rating agencies or financial consultant etc., towards
their investment avenues. It was evident among the variables selected to measure the attitude,
both the rural and urban respondents provided first rank to the factor investing today is for a
better tomorrow because it has secured highest mean score of 44.67 and 44.07 followed by
investment offers safety, secured second rank with a mean score of 41.87 and 40.47, invest
today and smile tomorrow ranked third with a mean score of 41.47 and 39.20. It could be
seen that, investment was a long-term affair, government securities were not attractive and
investor was guided by credit rating agencies secured the least mean scores. The result clearly
indicated that the variable, “Investing today is for a better tomorrow” has secured the highest
mean score and it was the important variable which encourages the respondents to save and
invest.
Investment behaviour of Salaried class investors:
Prof. SanketL.Charkha & Dr.Jagdeesh R. Lanjekar (2018) studied the saving and
investment pattern of salaried class people in Pune City. Researchers conducted the survey
among 60 salaried employees in the city to know the investing pattern and factors considered
for their different types of investment avenues. They analyzed and found that that salaried
employees consider the safety as well as good return on investment were the vital factors for
their investment on regular basis. Respondents were much more aware about the different
investment avenues available in India except female investors.
Deepak Sood&Dr. Navdeep Kaur (2015) has conducted the research to determine the
relationship between the savings and investments pattern among the salaried class people of
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Chandigarh (India). The data was collected through structured questionnaire distributed to
200 people working in different sectors at Chandigarh. It was found from the analysis there
was relationship between Annual Savings and Age, Income, Sector wise Employment,
Education of people at Chandigarh. Analysis has been done through One Way ANOVA. It
was propounded here that the most preferred investment options were LIC and bank deposits
and most of the factors influencing investment decisions were high returns, tax benefit and
safety.
George Varghese (2015) conducted an empirical analysis of investment behaviour of
salaried class investors in Kerala. Researcher states that the investors normally not willing to
take more than moderate risk, opt for modest return and prefers for long term benefits.
Though there are many investment opportunities in India but people were concentrating more
on the major long term investments like fixed deposits, gold, life insurance, post office
savings, real estate, provident funds and short term alternatives like the chit funds, private
financial firms etc.
Investment behaviour of individual investors:
Prof. Sumandiran Prithiviraj & Prof. Gokul G (2016) analysed the investment behaviour
of individual investors in Coimbatore City. They concluded that the investment behaviour
was found to be better at the time of investment than before the investment & post
investment. Safety was the foremost preferred aspect among the fixed income segment and
also came to know that Capital appreciation was foremost preferred aspect in long term
investment and pride and contingency savings.
Gowri Nair & Parvitha N (2015) studies the investment behaviour in Kollam Corporation.
They concluded that the most selected alternative is Fixed Deposit. Most of them were
having the opinion that fixed deposit was more safe and secure. The second option was Gold.
People choose Gold because it has more value and a lifelong asset. The third one was
recurring deposit, people are feeling that the interest rate was more compared to fixed deposit
also they feel it as a monthly investment. The fourth one was Post Office Monthly Income
Scheme. It can be done by investing in small amount. It was a safer option. The fifth one is
Chit funds. It’s also considered as a safer option.
Ambrose Jagongo& Vincent S. Mutswenje (2014) examined the factors influencing
investment decisions of individual investors at the Nairobi Stock Exchange. The study was
conducted on the 42 investors out of 50 investors that constituted the sample size. To collect
data the researcher used a structured questionnaire that was personally administered to the
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respondents. The questionnaire constituted 28 items. The respondents were the individual
investors. In this study, data was analysed using frequencies, mean scores, standard
deviations, percentages, Friedman’s test and Factor analysis techniques. The researcher
confirmed that there seems to be a certain degree of correlation between the factors that
behavioral finance theory and previous empirical evidence identify as the for the average
equity investor. The researcher found out that the most important factors that influence
individual investment decisions were: reputation of the firm, firm’s status in industry,
expected corporate earnings, profit and condition of statement, past performance firms stock,
price per share, feeling on the economy and expected divided by investors. The findings from
this research would provide an understanding of the various decisions to be made by
investors based on the prevailing factors and the eventual outcomes for each decision and
would identify the most influencing factors on the company’s investors’ behaviour on how
their future policies and strategies will be affected since investment decisions by the investors
will determine the company’s strategy to be applied.
N. Geetha &Dr. M. Ramesh (2011) researcher examined on people’s choice in investment
avenues of Kurumbalur. Data were collected using structured questionnaires. The sample size
of area is analysed by tools selected for this study was two hundred and ten respondents were
randomly selected from the town. Data were analysed using descriptive statistics and chi-
square technique. All the age groups are given more preference on investing in insurance,
Post Office Savings (NSC), Public Provident Fund (PPF) and Bank Deposit (BD) except
those who are more than fifty years.
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